EEL 4914 Exam on Economics (2) Dr. Fernando Gonzalez Spring 2003 NAME group# For each question you must provide a solution that has the following form: AAAAAAAF 92.196,4$06.01)06.01(500$7=−+=F You must show the graph and the equations. 1. You decide to save $600 per month every month until you retire in 30 years. You invest this money and earn an average of 6% per year compounded monthly. How much will you have saved when you retire?2. You did a good job so your boss decides to give you a $5,000 raise to your yearly salary. Assume you work for another 30 years at this company and receive a 3% raise every year to compensate for inflation. If my personal investment interest rate is 6% per year compounded yearly what is the total amount of money that this raise represents over the 30 years?3. A company wants to increase its profit and is considering buying a machine. It uses an interest rate of 5%. Which machine if any should the company purchase? Machine A cost $70 gives an annual benefit of $30 and has a $20 salvage value after its 2 year life. Machine B cost $100 gives an annual benefit of $32 and has a $25 salvage value after its 3 year life.4. Compute A. The periodic interest is 12%.
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